Exploring China’s “Internet Plus” Future

The growth of the internet is having a massive effect on transforming and modernizing Chinese industries and businesses. So much so that the Chinese government has created its own “Internet Plus” initiative to transform, modernize and equip traditional industries to join the modern economy.

Internet Plus strategy will have a huge impact on businesses

China’s new Internet Plus strategy will have a huge impact on businesses across all industries, especially as the roles of big data and data centers grow. For businesses hoping to enter the Chinese market, understanding Internet Plus is a critical component to achieving success.

The Internet Plus initiative was built out of a motivation to connect China’s growing economy to the power of connected services. With so many traditional industries in China, ranging from manufacturing to agriculture, the government is set on linking these industries to the world.

In its 2015 Government Work Report, the government states that it will launch major projects to develop equipment, networks, circuits, energy, materials and even biomedicines to help emerging industries become leading ones.

Part of the motivation for this push comes as the manufacturing boom that helped China grow at astonishing rates has now begun to moderate. New sources of growth are needed.

According to McKinsey, in 2013 China’s internet economy represented 4.4 percent of gross domestic product (GDP) — higher than the United States and Germany — representing a possible avenue of significant growth.

The Elements of ‘Internet Plus’

The Internet Plus roadmap is a five-year plan to integrate cloud computing, big data and the Internet of Things with a variety of industries from manufacturing to commerce, internet banking, agriculture and many others.

Internet Plus is made up of several different initiatives:

•     More funds for research and development, reaching 2.5 percent of GDP through 2020
•     Decreased dependency on non-domestic technology innovation
•     Access to 100 MB/s internet connections for people in large cities
•     Broadband connectivity to reach 98 percent of population
•     More funds for promoting business development and innovation

This plan is already showing benefits for businesses hoping to enter the Chinese market. At a recent conference organized by VMware and the Chinese Academy of Engineering, Chinese business decisionmakers heard from EMC senior vice president Charles Fan who spoke about Internet Plus, stating that the country’s economy will “radically change” due to the program.

This will happen through growth in mobile devices, cloud service, the Chinese internet boom and a “new generation” of applications that connect people to social media, big data and analytics.

This growth will attract offshore businesses looking to make an impact in the burgeoning Chinese internet economy, and they will need experienced and sophisticated partners such as China Telecom to assist their efforts.

How Does Big Data Fit In?

While big data plays a part in the Internet Plus program, it’s also a separate issue in its own right. E Weinan, dean of the Beijing Institute of Big Data Research, has explained the need for further growth: “While the internet has a solid foundation, which Chinese companies can draw upon and enjoy better use amid China’s huge market, there has not yet been a mature technology path in big data that Chinese companies can rely upon.”

McKinsey’s 2016 China consumer report finds China as the world’s largest e-commerce market — generating revenue of $615 billion in 2015, nearly the same as Europe and the United States put together. Chinese consumers, eager to use new technology and make purchases — much of both trends mobile-based —  are therefore providing sites with huge amounts of consumer data, ripe for analysis and segmentation. Targeted advertising could unlock untold billion yuan from shoppers across the country.

China’s big data market is expected to reach 822.88 billion yuan ($124 billion) in 2020, up from 76.7 billion yuan in 2014. This will directly help power data centers, China’s internet growth, innovation and more — all in accordance with Internet Plus goals.

Do you want to learn more about how to take advantage of the Internet Plus growth in China? Contact China Telecom Americas to learn more.